Start-up business plans can be intimidating. In many cases, they are written by people who have never written a business plan before. What should be included? What should be left out? How much detail is enough? These are a few of the many questions that come to mind when considering a start-up business plan. They require answers.
Remember the two primary questions that every business plan must answer: How is it going to make a profit? and How is it going to pay back the investment of money and time? Those are the questions that your start-up plan must answer. Anything else is supporting information.
Many new businesses get lost in the details because they forget to clearly answer a primary question: What business am I in? The answer can be expanded as your business grows, but it should not dramatically change. If you start a coffee shop but it evolves into a day-care center, you really didn't know what business you were in. That's why developing a well-researched business plan is so important.
The principal difference between a start-up and growth business plan is that a start-up is written before the business opens and a growth plan is compiled after. The difference is perspective—where the business is when you write it. Because the business is in a different status, so are the answers to your two primary questions.
The start-up plan must address questions like:
What do I need to start the business?
How much will it cost?
Where should the business be located and why?
Who will my customers be?
Answers are projected into the future: If I do this, the results will be that. It's educated guessing. Of course, for success, the guesses must be realistic and defensible. You must rely on what others have learned about starting up similar businesses. You must follow their successes and learn from their mistakes. You shouldn't attempt to design a new business model until you've developed the knowledge and experience needed to gamble lots of time and money on the outcome.
Knowledge and Experience
Your prospective in developing a new business will be based on your current knowledge and experience as well as anything that you can learn before you open for business or take it to the next level. That's why it is imperative that you prepare yourself before you prepare your business. If you've never worked in a restaurant, don't try to start one. If you don't know much about widgets, don't attempt to sell or repair them. Much of what you will be offering your customers is based on your knowledge and experience. An importer must know product resources and international trade laws. A retailer must understand profitable marketing. An auto repair shop must know how to efficiently diagnose and repair cars.
Business is the trading of knowledge for money. A consultant sells her business knowledge for money. A customer trades his money for someone's knowledge of how to make a tasty latte. A doctor trades medical knowledge for money. To succeed in business, find an area in which you can be an expert and sell your expertise to those who benefit from it—and will pay you money for the benefits.
The more you know about what you sell or offer, the greater opportunities you will have to profit from that knowledge and experience. That's Business 101. Keep that in mind as you write your business plan from the perspective of a start-up venture.
Your start-up business plan will also be dictated by the business structure you use. For example, an individual setting up a business will have a simple business plan compared to a corporation that sets up the same business. The primary reason is that an individual's business plan may only have a few readers, while the corporation's plan may be read by dozens. Each reader will have a different perspective on the business and be looking for specific information that others may not require. But they all want to know where the profit is coming from and how the debt will be paid.
Another factor in designing your start-up business plan is what model you are using. That is, will your business be independent or will it be a franchise? A franchise is a business that is modeled after another business, often using its name and modified business plan. Franchises aren't free. A franchise for a successful restaurant chain, for example, can cost a million dollars or more. In addition, being a franchisee may require that you follow strict rules in how you set up and operate your business. On the plus side, the franchisor will help you develop your business plan.
How can I make sure that my business doesn't break any laws?
Many small businesses only need to pay their taxes on time. Others deal with import and export laws, employment laws, fair-trade laws, and other legal factors. As you develop your business plan, discuss your business with an attorney who can tell you how to operate legally and safely.
An independent business is self-governing within the law. As long as the business keeps adequate income and expense records to pay accurate taxes and follows business laws and employment regulations, that business may operate with great latitude. No official will come in to your business and say, “Hey, you can't sell blue widgets—only red ones!” The majority of small start-up businesses are independent. Thousands of them open up for business every day.